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Income Tax Rates & Allowances
Personal Allowance - The standard Personal Allowance for 2019/20 is £12,500. This is the amount of income you don’t have to pay tax on.
|Personal Allowance* - up to 10% of the PA can be transferred to a spouse or civil partner who is a basic rate taxpayer||£12,500|
|Blind Person's Allowance||£ 2,450|
|Dividend Tax Allowance - taxes the first £2,000 at nil||£ 2,000|
|Personal Savings Allowance - Basic rate taxpayer||£ 1,000|
|Personal Savings Allowance - Higher rate taxpayer||£ 500|
You don’t get a Personal Allowance on taxable income over £125,000.
|Income after allowances 2019/20|
|Band of taxable income||Rate||Dividend rate|
|Starting rate for savings
||up to £5,000||0%|
|Basic rate||up to £37,500||20%||7.5%|
|Higher rate||£37,501 - £150,000||40%||32.5%|
|Additional rate||Over £150,000||45%||38.1%|
Income Tax Rates - applied to the amount of income after deduction of personal allowances.
Married Couple's Allowance - https://www.gov.uk/married-couples-allowance
People born before 6 April 1948 - https://www.gov.uk/income-tax-rates/born-before-6-april-1948
Blind Person's Allowance - https://www.gov.uk/blind-persons-allowance
Capital Gains Tax
Capital Gains Tax (CGT) - is a tax on the profit when you sell (or dispose of) something that has increased in value. You pay CGT on the gain when you dispose of most personal possessions worth £6,000 or more, apart from your car, property that isn’t your main home, your main home if you’ve let it out, used it for business or it’s very large, shares that aren’t in a NISA, ISA or PEP & business assets (but see Entrepreneurs’ relief below).
You don’t usually pay tax on gifts to your husband, wife, civil partner or a charity. You don’t pay capital gains tax on certain assets, including any gains you make from: NISAs, ISAs or PEPs, UK government gilts and Premium Bonds, betting, lottery or pools winnings.
Capital Gains Tax allowances - You only have to pay capital gains tax on your overall gains above your tax-free allowance (called the Annual Exempt Amount). Capital gains tax rates of 10% and 20% introduced for disposals on or after 6 April 2016 do not apply to transactions involving residential property. Capital gains tax rates for these transactions remain at 18% and 28%. An income tax trade loss may be offset against capital gains.
|TAX RATES - INDIVIDUALS||2017/18||2018/19||2019/20|
|Standard rate for gains on residential property||18%||18%||18%|
|Higher rate for gains on residential property||28%||28%||28%|
|Annual Exempt Amount|
Entrepreneurs’ relief (ER) - may be available for certain business disposals taking place on or after 6 April 2008 and has the effect of charging the first £10 million (from 6 April 2011) of gains qualifying for the relief at an effective rate of 10%.
The relief will apply to gains arising on a disposal of:
From 6 April 2019 the 12 month holding requirements stated above will be increased to 24 months.
A trading business includes professions but only includes a property business if it is a ‘furnished holiday lettings’ business.
Restrictions on obtaining the relief on an ‘associated disposal’ are likely to apply in certain specific situations. This includes the common situation where a property is in personal ownership but is used in an unquoted company or partnership trade in return for a rent. Under ER the availability of relief is restricted where rent is paid.
Business asset rollover relief - You may be able to delay paying Capital Gains Tax if you:
Business Asset Rollover Relief means you won’t pay any tax until you sell the new asset. You may then need to pay tax on the gain from the original asset.
You can also claim:
Gift Hold-Over Relief - You may be able to claim Gift Hold-Over Relief if you give away business assets (including certain shares) or sell them for less than they’re worth to help the buyer. Gift Hold-Over Relief means:
Tax isn’t usually payable on gifts to your husband, wife, civil partner or a charity.
Eligibility - The conditions for claiming relief depend on whether you’re giving away business assets or shares.
In simple terms, a pension scheme is just a type of savings plan with favourable tax treatment.
Pensions set by your employer - also known occupational pensions broadly fall under two main categories, these are: defined benefit pension schemes & defined contribution pension schemes.
Pensions set up by yourself - contract based schemes are provided by insurance companies and other pension providers. They’re effectively a contract between you and the pension provider and include Personal pensions, SIPPs, Stakeholder pensions & Retirement annuities.
How much can I pay into a pension? - If you’re a UK taxpayer, in the tax year 2019-20 the standard rule is that you’ll get tax relief on pension contributions of up to 100% of your earnings or a £40,000 annual allowance, whichever is lower.
For example, if you earn £20,000 but put £25,000 into your pension pot (perhaps by topping up earnings with some savings), you’ll only get tax relief on £20,000.
Similarly, if you earn £60,000 and want to put that amount in your pension scheme in a single year, you’ll normally only get tax relief on £40,000.
Any contributions you make over this limit won’t attract tax relief and will be added to your other income and be subject to Income Tax at the rate(s) that applies to you.
However, you can carry forward unused allowances from the previous three years, as long as you were a member of a pension scheme during those years.
But there is an exception to this standard rule.
If you have a defined contribution pension, and you start to draw money from it, the annual allowance reduces to £4,000 in some situations.
Since April 2016 the annual allowance is also reduced if you have an income of over £150,000, including pension contributions.
Automatic enrolment - since October 2012, Whether you work full time or part time, your employer will have to enrol you in a workplace pension scheme if you:
As long as you meet these criteria you’ll also be covered if you’re on a short-term contract or an agency pays your wages. If you earn less than £10,000, but above £6,136 (for the tax year 2019-20) your employer doesn’t have to automatically enrol you in the scheme. You can still ask to join. Your employer can’t refuse and must make contributions for you.
Accessing your pension - In Budget 2014, George Osborne announced 'pensioners will have complete freedom to draw down as much or as little of their pension pot as they want, anytime they want. Big changes came into effect on 6 April 2015 for those with money purchase pensions.
Inheritance tax is paid if a person’s estate is worth more than £325,000 when they die.
An estate is exempt from IHT if the deceased left everything to their husband, wife or civil partner. Married couples and civil partners can give any value of gifts to each other during their lifetime without IHT being due on them. If someone’s estate is less than the IHT threshold of £325,000, the remaining threshold can be transferred to their husband, wife or civil partner’s estate when they die. This means the surviving partner’s estate can be worth up to £650,000 before any IHT is due. IHT may also be payable on gifts made in an individual's lifetime but within 7 years of death. Transfers of assets into trust made in an individual's lifetime may be subject to an immediate charge at lifetime rates.
Inheritance tax rule changes - In the 2015 Budget, the Chancellor, George Osborne announced a new transferable main residence allowance, which will gradually increase from £100,000 in April 2017 to £175,000 per person by 2020/21. This is in addition to the main nil-rate band. It will effectively raise the IHT-free allowance to £500,000 per person. Where married couples jointly own a family home and want to leave this to their children or grandchildren, the total IHT exemption will be £1m.
|Standard nil rate band £325,000|
|Annual Exemption £3,000|
|Small Gifts £250|
|Normal expenditure out of income|
|Rates of Inheritance tax
|Death rate if >10% charitable legacies made||36|
|IHT may also be payable on gifts made in an individual's
lifetime but within seven years of death.
|Years before death||Tax you pay|
|There’s no IHT on a wedding gift worth up to:|
|Gift from||Amount (£)|
Business Relief - allows a business to be passed on by reducing the IHT on it by up to 100%.
Agricultural Relief - allows a working farm to be passed on without paying IHT on it.
National Insurance contributions (NICs) qualify you for certain benefits including the State Pension.
|RATES - CLASS 1 EMPLOYER AND EMPLOYEE||2017/18||2018/19||2019/20|
|Thresholds (per week)|
|Lower earnings limit (LEL) (employees and employers)||£113||£116||£118|
|Primary threshold (PT) (employees)||£157||£162||£166|
|Secondary threshold (ST) (employers)||£157||£162||£166|
|Upper earnings limit (UEL) (employees only)||£866||£892||£962|
|Upper secondary threshold (UST) for under 21s (employers)||£866||£892||£962|
|Apprentice upper secondary threshold (AUST) for under 25s||£866||£892||£962|
|RATES - CLASS 1 EMPLOYER AND EMPLOYEE|
|Earnings below LEL||0%||0%||0%|
|Earnings between LEL and PT||0%||0%||0%|
|Earnings between PT and UEL||12%||12%||12%|
|Deferred rate for certain employees with more than one job||2%||2%||2%|
|Earnings above UEL||2%||2%||2%|
|Earnings below ST, UST or AUST||0%||0%||0%|
|Above ST, UST or AUST||13.8%||13.8%||13.8%|
|Employment allowance (EA) - offset against employer's Class 1 NICs||£3,000||£3,000||£3,000|
|Class 1A - on employer-provided benefits-in-kind||13.8%||13.8%||13.8%|
|RATES - OTHER|
|Class 2 (self-employed flat rate) - per week||£2.85||£2.95||£3.00|
|Small earnings exception (per year)||£6,025||£6,205||£6,365|
|Class 3 (entitlement to pension & other benefits) - per week||£14.25||£14.65||£15.00|
|Class 4 (self-employed) Lower profits limit LPL (per year)||£8,164||£8,424||£8,632|
|Upper profits limit UPL (per year)||£45,000||£46,350||£50,000|
|Rate - below LPL||0%||0%||0%|
|Rate - between LPL and UPL||9%||9%||9%|
|Rate - above UPL||2%||2%||2%|
In certain circumstances an employer may be required to make payments to an employee who is not at work. The most common reasons are sickness and maternity.
Statutory Sick Pay - Your employees may be eligible for SSP which is £94.25 a week (2019/20) for up to 28 weeks. You can offer more if you have a company sick pay scheme (you can’t offer less). SSP is paid when the employee is sick for 4 days in a row (including non-working days). You start paying SSP from the fourth day (if they normally work that day).
Maternity pay and leave - When you take time off to have a baby you might be eligible for Statutory Maternity Leave which is 52 weeks and made up of:
You don’t have to take 52 weeks but you must take 2 weeks of leave after your baby is born.
Statutory Maternity Pay is paid for up to 39 weeks. You get:
SMP is paid in the same way as your wages (eg monthly or weekly). Tax and NI will be deducted.
|Type||Max period||2019/20 to qualify must earn at least £118/wk|
|Statutory Sick Pay||28 weeks||£94.25|
|Statutory Maternity Pay||First six weeks||90% of weekly earnings|
|Next 33 weeks||£148.68 or 90% of weekly earnings if lower|
|Statutory Paternity Pay||1 or 2 weeks||£148.68 or 90% of weekly earnings if lower|
|Statutory Adoption Pay||First six weeks||90% of weekly earnings|
|Next 33 weeks||£148.68 or 90% of weekly earnings if lower|
|Shared Parental Pay||37 weeks||£148.68 or 90% of weekly earnings if lower|
You’ll usually get Child Benefit for children you’re responsible for, even if you’re not their parent. Only one person can get Child Benefit for each child. There are 2 Child Benefit rates.
|Allowance||Weekly rate 2019/20|
|Eldest or only child||£20.70|
|Additional children||£13.70 (per child)|
Child Benefit stops 31 August on or after your child’s 16th birthday if they leave education or training. It continues if they stay in education or training, but you must tell the Child Benefit Office.
High Income Child Benefit Tax Charge - You may have to pay a tax charge if you have income over £50,000 and you or your partner get Child Benefit. If you’re affected by the tax charge you can choose not to get Child Benefit payments. You can carry on getting Child Benefit and pay any tax charge at the end of each tax year. Register for Self Assessment (if you don’t already fill in a tax return) - so you can send a tax return. Complete the tax return and declare the amount of Child Benefit received for the tax year and pay the tax charge.
What counts as income - To work out if your income is over the threshold, you’ll need to work out your ‘adjusted net income’. Your adjusted net income is your total taxable income before any personal allowances and less certain tax reliefs, such as trading losses, donations to charity made through gift aid and pension contributions.
Car Benefit - The taxable benefit is calculated as a percentage of the list price of the car, on the day before it was first registered. The percentage depends on the rate at which the car emits CO2.
Car Fuel Benefit - Where an employee has the benefit of private fuel for a company car the percentage used to calculate the car benefit is applied to the 'fuel charge multiplier' to work out the assessable benefit. Fuel charge multiplier for 19/20 £24,100 (18/19 £23,400)
Van Benefit - There will be a tax charge for an employee who is provided with a company van that is made available for private use. There is also a tax charge where fuel is provided for private use. Benefit for CO2 emitters 19/20 £3,430 (18/19 £3,350) Fuel benefit 19/20 £655 (18/19 £633)
|Vehicle type||Pence per mile|
|Cars and vans||to 10,000 miles||45p|
Mileage Allowance Payments - are what an employee can receive from their employer for using their own vehicle for business.
Advisory Fuel Rates - where employers reimburse employees for business travel in a company car. Pence/mile
|Engine size||Fuel type||01/12/17||01/03/18||01/06/18||01/09/18|
|1400 or less||Petrol||11||11||11||12|
|1400 or less||LPG||7||7||7||7|
|1600 or less||Diesel||9||9||10||10|
|1401 to 2000||Petrol||14||14||14||15|
|1401 to 2000||LPG||9||9||10||10|
|1601 to 2000||Diesel||11||11||11||12|
The standard rate of VAT is 20%. Some things are exempt from VAT, eg. postage stamps, financial and property transactions. The VAT rate businesses charge depends on their goods and services.
|RATES AND LIMITS||From 1.4.2017||From 1.4.2018||From 1.4.2019|
|Annual registration limit||£85,000||£85,000||£85,000|
|Annual de-registration limit||£83,000||£83,000||£83,000|
|Cash & annual accounting turnover limit||£1.35m||£1.35m||£1.35m|
|Cash & annual accounting - exit turnover||£1.6m||£1.6m||£1.6m|
|Flat rate schemes - entry turnover limit||£150,000||£150,000||£150,000|
|Flat rate schemes - exit turnover limit||£230,000||£230,000||£230,000|
The VAT registration threshold is been frozen at £85,000 until April 2022.
We offer a comprehensive VAT service including assessing the benefits and disadvantages to your business of being VAT registered, deciding on the most appropriate scheme, attending to VAT registration, VAT returns preparation & dealing with more complex VAT
ISAs (Individual Savings Accounts) allow you to earn interest on your savings or investments tax-free. The amount you can put into your ISA is capped for each tax year, for 2018/19 and 2019/20 it’s £20,000. You can choose to split your ISA allowance across different ISAs,.
You can choose from a Cash ISA, Stocks & Shares ISA, Innovative Finance ISA (IFISA), Lifetime ISA (LISA) and Help to Buy ISA. There’s also a Junior ISA to help you save for the kids.
Here are a few tips on how to get the maximum benefit from your ISA allowance:
Corporation tax is charged on the profits of companies and unincorporated bodies that are not partnerships, for example members' clubs. The term profits includes all sources of income and capital gains.
A company pays Corporation Tax on the profits it makes from doing business (‘trading profits’), its investments, and selling assets for more than they cost (‘chargeable gains’ – company assets include land and property, equipment and machinery, and company shares).
The rate of corporation tax is fixed by reference to financial years. The financial year commences on 1 April and thus the financial year 2020 is the year commencing on 1 April 2020 etc.
The Corporation Tax rate for company profits is 19 per cent. This is now the standardised rate for all businesses. In 2016-17, the Corporation Tax rate was 20 per cent. Prior to April 2016, the rate depended on how much profit your company made.
|Year||Financial Year Commencing 1 April 2017||Financial Year Commencing 1 April 2018||Financial Year Commencing 1 April 2020|
The deadline to pay your Corporation Tax bill is nine months and one day after the end of your accounting period for your previous financial year, so if your accounting period ends on 31 March, your Corporation Tax deadline is 1 January.
|PLANT AND MACHINERY||2017/18||2018/19||2019/20|
|AIA of 100% on expenditure up to||£200,000||£200,000||£1m|
|£1m from 1/1/2019|
|Structures and buildings allowance||n/a||2% from 1/1/2019||2%|
|Main writing down allowance rate||18%||18%||18%|
|Special rate pool||8%||8%||6%|
|Energy saving/environmentally beneficial assets||100%||100%||100%|
|Commercial / industrial building (enterprise zone)||100%||100%||100%|
|Research and development||100%||100%||100%|
|Low emission less than or equal to 75g/km||100%|
|Low emission: less than or equal to 50g/km||100%||100%|
|Expenditure incurred before 1 April 2018:|
|Emissions between 75g/km and 130g/km or equal to 130g/km||18%|
|Emissions greater than 130g/km||8%|
|Expenditure incurred on or after 1 April 2018:|
|Emissions between 50g/km and 110g/km or equal to 110g/km||18%||18%|
|Emissions greater than 110g/km||8%||6%|
Stamp Duty & Stamp Duty Land Tax
SDLT is payable in England & NI. It applies to transactions in Wales up to 4 April 2018, from which date the Welsh LTT applies. In Scotland, the LBTT replaced SDLT from April 2015.
|Residential property||SDLT rate|
|Up to £125,000||Zero|
|The next £125,000 (the portion from £125,001 to £250,000)||2%|
|The next £675,000 (the portion from £250,001 to £925,000)||5%|
|The next £575,000 (the portion from £925,001 to £1.5 million)||10%|
|The remaining amount (the portion above £1.5 million)||12%|
Higher rates for additional properties - From 1 April 2016, you’ll usually have to pay 3% on top of the normal SDLT rates if buying a new residential property means you’ll own more than one.
|Rates for first time buyers (for properties worth £500,000 or less)|
|Property value||After 22 November 2017 - on the portion of value above the threshold|
|£500,000+||Standard rates above apply|
|Non-residential property from 17 March 2016 - on consideration falling in each band||SDLT rate|
|Up to £150,000||Zero|
|£150,001 to £250,000||2%|
Tax when you buy shares - If you buy:
The rate in either case is 0.5% of the consideration.
You don’t have to pay tax if you:
Investing in a small business
Enterprise Investment Scheme
The Enterprise Investment Scheme is designed to help smaller, higher-risk companies raise finance and investors can obtain generous income tax and capital gains tax breaks for their investment. The table below sets out the income and capital gains tax reliefs.
Venture capital trusts
VCTs are designed to encourage private individuals to invest in smaller high-risk unquoted trading companies. They can receive income tax relief of 30 per cent of the amount invested, up to £200,000. Dividends paid out of VCTs are tax-free and capital gains are also tax-free.
Seed Enterprise Investment Scheme
A junior version of EIS known as Seed Enterprise Investment Scheme (SEIS) has been introduced - please see table below for differences.
|Annual investment limit||£200,000||£2 million
|Income tax relief for subscribers||30%||30%||50%|
|Clawback if held for less than||5 years||3 years||3 years|
|Tax free dividends?||Yes||No||No|
|Tax free capital gains?||Yes||Yes - after 3 years||Yes - after 3 years|
|Tax relief for losses?||No||Yes - after 3 years||Yes - after 3 years|
|IHT business property relief?||No||Yes||Yes|
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